WTI finds support near $41, edges higher toward $42
- WTI gains traction after dropping to $41 on Monday.
- Heightened US-China tensions keep crude oil's upside capped.
- Investors remain cautious regarding the energy demand outlook.
Crude oil prices edged higher last week with the barrel of West Texas Intermediate (WTI) gaining 1.65% and closing the fourth straight week in the negative territory. However, heightened US-China geopolitical tensions weighed on the market sentiment and capped the risk-sensitive WTI's gains limited.
Although the WTI edged lower toward $41 at the start of the week, it reversed its direction and was last seen rising 1% on the day at $41.65.
Eyes on US-China tensions, coronavirus headlines
Nevertheless, the WTI could find it difficult to break above $42 as investors are likely to remain cautious and refrain from taking large positions while waiting for fresh developments surrounding the US-China conflict. On Monday, China confirmed that it closed the US consulate in Chengdu. Last week, "no country with a conscience or independent spirit will side with the US against China," said China's foreign minister Wang Yi.
Meanwhile, market participants will keep a close eye on the rising number of coronavirus cases globally. A resurgence of shutdowns could revive concerns over a dismal energy demand outlook and put additional weight on the WTI's shoulders.
Later in the week, the American Petroleum Institue's (API) and the US Energy Information Administration's (EIA) weekly crude oil inventory data will be looked upon for fresh impetus.
Technical levels to watch for